El Segundo-based Mattel Inc. took two major steps last week in its campaign to find new life and new revenue streams without its iconic but so-yesterday blonde.
First, the toy-making giant partnered with actress Julia Roberts to turn its American Girl doll characters into a feature film. Also in the partnership is Walden Media, publisher of the 11-book American Girl series, which has sold 111 million copies. The movie will be based on Kit Kittredge, the American Girl character who endures hardships growing up during the Great Depression.
Then, Mattel spent $230 million to acquire Hong-Kong based techno toy firm Radica and unveiled HyperScan, a hybrid video game device for the elusive eight- to 12-year-old segment.
"This new game system bridges the gap in gaming experiences for the 'tween' boy who has graduated from traditional plug & play games but is not quite ready for the mature content and expense of high-end video game consoles," said Cynthia Neiman, vice president of games and interactive marketing. "HyperScan gives them another option, offering kids a way to play collector card games and video games in one, with age-appropriate content."
HyperScan will retail for around $70, compared to the $250 price tag on Sony Corp.'s Playstation Portable or the Nintendo DS. Those devices are more complicated and fragile, and able to play games with graphic content.
Radica makes electronic games and other products including 20Q, Play TV and Girl Tech products. It is Mattel's first major acquisition since the late 1990s.
"The addition of Radica to the Mattel portfolio provides us the opportunity to partner our global brands with Radica's technological expertise to better participate in the burgeoning electronic toys arena, said Robert A. Eckert, Mattel's chairman and chief executive officer, in a press release.
Mattel has struggled with declining sales in its Barbie division for the past 11 quarters, but is riding high in the wake of a solid earnings report earlier this month. It reported second quarter earnings of $37 million, compared with a loss of $94 million in the year-earlier period. Revenue rose eight percent to $958 million, soundly exceeding analyst expectations.
Mattel is in a race with chief rival Hasbro Co. to add more tech products for young boys, as well as young girls, to dominate the electronic toy market.
While the feature film is a first for Mattel, American Girl characters have been on television before. American Girls Samantha and Felicity graced the small screen in 2004 and 2005 made-for-TV movies. Another American Girl movie, based on Molly, will air on the Disney Channel this fall.
Goldsmith-Thomas Productions will produce the film in association with Red Om Films, the same team that produced the TV movies. Walden scored a big screen hit recently with a film based on its book series, "The Chronicles of Narnia."
The Shoe Drops
Known for its white tennis shoes with diagonal stitching, K-Swiss was popular with teen prepsters in the 1990s, but the company has since struggled to revamp its image into a more "street" brand.
Domestic and global sales are both down compared with last year, but the Westlake Village-based shoe company delivered some relatively good news in its earnings report last week.
Second-quarter earnings were up 21 percent from a year for K-Swiss Inc., to $20 million. The per-share earnings of 58 cents exceeded analysts' expectations of 46 cents, and shares soared 20 percent to $27.74 last week. In a statement, the firm cited "continued investments in marketing, sales and product development for the Royal Elastics brand as well as the expansion of European operations" for its success.
Revenue fell two percent, and president Steven Nichols admitted that domestic business continues to be "soft."
"Booking trends," he said, "indicate that a more realistic timeframe for stemming the domestic downturn is now at least the second half of 2007." Still, the company raised third-quarter guidance by $10 million, to $129 million in sales.
K-Swiss' announcement followed closely behind cross-town rival Skechers USA Inc. The Manhattan Beach-based shoe manufacturer's second quarter net income edged up to $17.6 million, from $15.9 million a year ago. But the company's 40 cent per share return was short of analyst expectations and the company's stock dropped nearly 15 percent to $20.93 last week.
Skechers' Chief Operating Officer David Weinberg said the earnings blip was caused by an accounting shift that pushed some revenue from June into July, suggesting that additional revenue should be reflected in third quarter results.
The company did raise third quarter earnings guidance to 42 cents per share from 37 cents on projected sales of $320 from $310 million. Skechers share price has doubled over the past nine months.
Staff reporter Emily Bryson York can be reached at (323) 549-5225, ext. 235, or at firstname.lastname@example.org .
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